The Allergan-Medicis Vanity Pharma Death Match Is About to Get Complicated

(MoneyWatch)  Imagine your drug company has the following problems:

A portfolio of expensive, discretionary cosmetic products that Medicare and Medicaid won't reimburse for; it's under investigation by the Department of Justice for alleged off-label promotion; the recession is crimping consumers' desire to spend money on non-essential drug products; and the marketplace is only becoming more crowded with competitors.

Sounds awful. Unless you're Allergan -- maker of wrinkle-killer Botox and skin-fold-filler Juvederm -- a company that is in precisely this position and yet is growing like gangbusters. Allergan sales were $1.1 billion in the last quarter, up 20 percent on the year before.

(The DOJ probe -- which is looking at whether Allergan promoted Botox for headaches even though it is not approved that -- is currently projected to cost the company $35 million.)

Allergan isn't alone. Its most famous competitor is Medicis, which makes Restylane and Perlane (fillers that compete with Juvederm). Its second quarter revenue was $132.5 million, up 22 percent.

Welcome to the recession-proof world of "medical aesthetics." It's different from major pharma. That picture of a flawless babe at the top of this post isn't a Medicis ad -- it's the cover of the company's annual report.

Allergan and Medicis have been locked in a highly profitable death-match for several years, with both companies bringing out me-too versions of the others' products, just like Coke and Pepsi. Consider:

• Medicis is waiting for the FDA to approve Reloxin, a rival to Allergan's Botox.
• In addition to fillers and Botulinum toxin products, Allergan will soon launch an Rx acne product, Aczone, which will no doubt steal a few scrips from Medicis' star brand, Solodyn.
• Medicis recently acquired LipoSonix, which makes a "body sculpting" product. Allergan already had the Lap-Band stomach restricter.

The next round will center on Allergan's Lumigan product. Currently, this is a glaucoma treatment. But Allergan has noticed that users' eyelashes grew longer with the drug. Already there's an off-label market in which the drug is used to give women the lashes they dream of. Users risk scary side effects, including permanent changes in eye color (although there's bound to be a niche market of folks who think that sounds totally cool).

The market is being complicated further by the entry of Johnson & Johnson, which just launched Evolence, another dermal filler. J&J is the newcomer to the field, and it will have a lot of catching up to do, culturally and economically.

But with growth rates of plus-20 percent even in a recession, this entertaining fight will only end the day that America's Baby Boomers put aside their vanity and decide to age gracefully -- i.e. never.